***The Crowd Strike IPO***((Doo Diligence[sic]))

****Although there is a lot of useful information in this article, it is mostly satire and not to be taken as investment advice****

Crowd Strike, although an incredible company that is rapidly growing, is a complete rip off right now. If you multiplied the total Class A and B shares by the $ 70.79 high reached today you would get a valuation of  $14,135,982,257. This is obviously outrageous, even by historically low-interest rates/Trump Bull Run standards.
You can imagine the typical reaction you’d get if you said this to somebody who bought it; “It doesn’t matter, it’s a great company, just buy and hold and all those wrinkles will eventually flatten themselves out”.  Think about it this way, a Mercedes Benz is a great car, but is it worth $10 000 000?  Of course not.  Please, wait for this company to come back down to reality before you jump over the deep end.

60% of the fully diluted outstanding shares are owned by 3 entities…That should ring some alarm bells.  Once those shares start freely trading, the price will probably tank.  Not good for the average mom and pop investor, that’s for sure.  With only 18 000 000 Class A shares, the addition of 178 688 971 new shares would result in almost 90% dilution in the secondary markets…

Okay, brace yourselves people, we are going to do something that might seem rather unconventional; we are going to divide the total additional paid in capital prior to this offering by the total Class B stock…………

$493 000 000

Divided by 178 688 97

EQUALS…………..$2.75!!!

Let’s do some more fun little math problems.  What was the closing price today?  64?  Okay, let’s divide 64 by 2.75.

What do you get?

23.2727272727.  That means the average gain on the Class B shares, if they were sold today, would be 2327.272727%!!!!!

Now that’s not completely fair.  Yes, the average price is $2.75, but, the Series A-1 shares were priced at 50 cents, which is a bit of an outlier compared to the rest of the preferred shares.  The image below is a table of each class of redeemable preferred stock

Lets us, just for fun, see what the implied profit would be for each letter in this varied alphabet of stock

The A’s………………………………. 12900% in profits

Yep

Season 6 Showtime GIF by Shameless - Find & Share on GIPHY

For the B’s………………………………………4571%

And for the C’s!  1422% in gains!!

 

Starting to understand why this valuation is ridiculous?

Okay, now let’s take a look at the book value. Even though this isn’t as relevant to this company since most of the value is intangible (i.e., people, know-how, intellectual property), it still sheds light on the extreme amount of dilution one would face if they were to buy this stock at the current price.

Pro Forma dilution is $30?….on a $34.00 stock?…….Makes sense.  In order for profit margins like this to occur, almost always, there has to be a counter-party who loses big time, or else where is all this profit going to come from, especially when it is obtained without the receiver of these profits lifting so much as finger, as is the case here with Warburg Pincus, Accel, and “Capital G” (formerly Google Capital 2016, L.P…. so Google)

At least they warn us.  A small remnant that is still remaining from the blue sky’s laws created way back following the Great Crash of 1929.  Can you imagine the theatrics that went on back then?!

Gross profits of $162 million.  That’s a pretty penny, right?  Not so fast.  The valuation of the company is 14 billion remember?  Like we said before, we go against the grain here, do things others don’t do, so we are going to calculate how long it would take to break even if you were to buy the stock right now.  …………….Here comes the magic people.  Are you ready for this?

14 billion………………………………………………………………………………..

divided by…………………………………………………………………………………….

162 million………………………………………………………………………………………………………………………

…………………………………………………………………………………………………

……………………………………………………………………………………………………………..

…………………………………………………………………………..

…………………………………………………………………………………….Equals

86 YEARS!!!!!  Yes!!!  Just a little over the average life span for an American Citizen. Think about it.  If you bought a business that was priced 86 times higher then its yearly earnings, how long is it going to take to pay it back?  86 years right?
You see, it’s not that hard to understand.  None of this is.  Finance is very simple;  it’s 2 + 2 =4, not rocket science.  It’s just the people who control the industry; the bankers, the lawyers, stockbrokers, the fund managers; they all like to guard their knowledge, just like in any profession, so they use all this bullshit lingo to keep you ignorant so you keep coming back, like your local mechanic.

Oh, we left out one small detail.  That number we just mentioned, it’s not their net income, it’s their gross profit, meaning the money they make BEFORE  they pay their bills!

You see that number at the bottom, that $140 077?  Yeah?  That’s their yearly earnings, not the 193 million we talked about before.  It’s NEGATIVE, not positive, NEGATIVE 140 077 MILLION……

Which is completely OK!!  They are an AMAZING company experiencing RAPID GROWTH, but $14 billion!?! That’s a little much.

They even tell you that you can’t vote!!!

I suppose they’ll take us to a dungeon somewhere surrounded by a moat in the Jersey Islands for writing this. Well, in this day and age, they don’t really need to do that kind of stuff anymore.  They can just shadowban us, or shut down our website or restrict our access to online communication.  Just imagine what it will be like when they achieve full censorship and full control over our finances.  Once it all goes into the blockchain — and it won’t be bitcoin people — it’s say bye bye, we aren’t in Kansas anymore.  We will never be able to escape!

Don’t like us pumping up companies then selling them to you for 12400% in profits while giving you zero voting rights…??

None of this is Crowd Strikes fault.  It’s more a product of a systemic issue in our capital markets. We must stress this again, this is a great company with a bright future, but 14 billion?  Ludicrous.  Going back to the Mercedes analogy;  just because it’s a good car doesn’t mean you should pay 10x what it’s actually worth!

 

“You have to know the past to understand the present.”

Carl Sagan

“If you want to know your past life, look at your present condition. If you want to know your future life, look at your present actions.”

― Padmasambhava

 

****DISCLAIMER****This is all my (our) opinion, and I (we) are not financial advisers. You should consult a financial adviser before making any investment decision with regard to publicly traded securities, or any security for that matter. This company carries an extremely high degree of risk. You should consider this information as similar to personal insight from a peer/friend/acquaintance, and thus it should, obviously, not be the primary source material for basing an investment decision, because, similar to any opinion from a peer/friend/acquaintance, it could be completely and utterly incorrect! Good luck and happy trading everyone****

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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